QuestionsQuestions (IRR OF Republic Act No. 10667)
The IRR is titled “Implementing Rules and Regulations of Republic Act No. 10667.” Its scope covers entities engaged in trade, industry, or commerce in the Philippines, or international transactions with direct, substantial, and reasonably foreseeable effects in the Philippines, including acts done outside the territory that affect the Philippines. It does not apply to combinations or activities of workers/employees or to agreements with employers designed solely for collective bargaining.
“Agreement” refers to any type or form of contract, arrangement, understanding, collective recommendation, or concerted action—formal or informal; explicit or tacit; written or oral.
“Acquisition” is the purchase or transfer of securities or assets through contract or other means for the purpose of obtaining control—by one entity of all or part of another, two or more entities over another, or one or more entities over one or more entities.
“Control” is the ability to substantially influence or direct the actions or decisions of an entity, whether by contract, agency, or otherwise.
The “relevant market” is the market in which a particular good or service is sold, combining the relevant product market and relevant geographic market. The relevant product market includes goods/services regarded as interchangeable/substitutable by consumers/customers, considering characteristics, prices, and intended use; the relevant geographic market is the area where supply and demand occur with sufficiently homogeneous competition conditions distinguishable from neighboring areas.
Per se prohibited agreements between or among competitors include: (1) restricting competition as to price (or components thereof) or other terms of trade; and (2) fixing the price at an auction or in any form of bidding, including practices like cover bidding, bid suppression, bid rotation, and other analogous bid manipulation.
Examples include setting/limiting/controlling production, markets, technical development, or investment; and dividing/sharing the market by volume of sales/purchases, territory, type of goods/services, buyers/sellers, or any other means.
No. Entities that control, are controlled by, or are under common control with another entity; have common economic interests; and are not otherwise able to decide or act independently are not considered competitors for purposes of the “between or among competitors” requirement.
Examples include: selling below cost to drive competition out (with a good faith meeting-competition proviso); imposing barriers to entry or preventing competitors from growing anti-competitively; imposing unrelated obligations as a condition for a transaction; unreasonable discriminatory pricing between similarly situated customers/sellers; restricting lease/contract for sale in ways that substantially prevent/restrict/lessen competition; tying/supplying one product conditional on purchase of another; unfairly low purchase prices to marginalized sectors; unfairly low purchase or selling prices on competitors/customers/suppliers/consumers; and limiting production/markets/technical development to prejudice consumers.
The IRR clarifies that the Act is not meant to prohibit permissible franchising, licensing, exclusive merchandising, or exclusive distributorship agreements—such as those giving each party the right to unilaterally terminate—unless found by the Commission to have substantial anti-competitive effect. It also notes protection of intellectual property rights, confidential information, and trade secrets.
The invoking entity/entities must clearly establish to the Commission’s satisfaction that the barrier to entry or anti-competitive act is an indispensable and natural result of superior product/process, business acumen, or legal rights/laws.
The Commission assesses whether the merger/acquisition is likely to substantially prevent, restrict, or lessen competition in the relevant market; and considers substantiated efficiencies likely to arise. It also compares competitive conditions likely with the transaction versus those that would likely have prevailed without the transaction. It may consider market structure, parties’ market position, actual/potential competition, alternatives and access to supplies/markets, and legal or other barriers to entry.
Notification is required when: (a) the aggregate annual gross revenues in/into/from the Philippines, or value of assets in the Philippines of the ultimate parent of at least one acquiring or acquired entity (including entities it controls) exceeds PHP 1,000,000,000; and (b) the value of the transaction exceeds PHP 1,000,000,000, using the specified asset/revenue calculations depending on the transaction type (assets inside/outside/mixed, or voting shares/acquisition of interests with voting/profit thresholds).
Successive transactions or acquisitions of parts of one or more entities occurring within a one-year period between the same parties (or entities they control or are controlled by, or under common control) are treated as one transaction. If there is a binding preliminary agreement, notification is based on that. If not, notification is made when the last transaction occurs that—together with preceding transactions—meets the thresholds.
The waiting period commences only upon the Commission’s determination that the notification is completed according to applicable rules/guidelines. If waiting periods expire without a decision, the transaction is deemed approved and may be consummated/implemented.
If a transaction meets thresholds and does not comply with notification requirements and waiting periods, it is considered void. The parties are subject to an administrative fine of 1% to 5% of the value of the transaction.
Control is presumed when the parent owns directly or indirectly more than one-half (1/2) of the voting power of an entity, unless exceptional circumstances clearly show that such ownership does not constitute control.
There is a rebuttable presumption of market dominant position if an entity’s market share in the relevant market is at least 50%, unless the Commission sets a different sector-specific threshold. The entity must rebut the presumption by showing that despite the share, it cannot control the market independently (using the Commission’s dominance criteria).
The Commission: defines the relevant market; assesses actual/potential adverse impact that is substantial and outweighs efficiency gains; uses a broad forward-looking perspective (including future market developments and public interest needs); balances preventing over-intervention against efficiency/productivity/innovation risks; and considers totality of evidence on whether it is more likely than not the entity engaged in anti-competitive agreement/conduct, including reasonable commercial purpose.